The government really needs to stay out of the stock market in America. The stock market failing like it is right now is a natural correction due to corporate greed. Passing the $700 billion "rescue" plan was dumb. We just randomly pulled $700 billion out of thin air.
Steve, has England passed a bailout plan yet? I know France Germany and Russia have.
I'll make a separtate post on our rescue plan in a mniute once I've posted on the US.
In an ideal world this would be true, but unfortunately they can't stay out. Money cannot just be "given" it has to be loaned and or exchanged for goods of value. Seeming as loans are what is already crippling the baks, the only way to pump capital into the system is by buying up shares of capital value. Strange isn't it?
The move - in effect - a is partial nationalization of the banking system, does put the United States in the awkward position of owning shares in institutions it also regulates. The shares purchased by the government will be nonvoting ones, therefore the government does not have a vote at the AGM in how the bank is run. However the bank still has it's loans and savings backed by government accounts - so there are still some advantages in the short term.
Much of the current crisis has been caused by the banks' unwillingness to lend to each other (competition after all), so the government hopes that if those loans can be guaranteed by its own accounts then lending will resume.
Another thing which is happening in the wake of the crisis is large banks merging to form super banks. This is also the case in the UK where HBOS and Lloyds TSB are being allowed to merge (they usually wouldn't due to anti-competition laws) and is another example of breaking protocol due to 'exceptional cirumstances'. These things aren't just decided they're planned over long periods of time therefore there are people manipulating the systme to ensure they still come out on top. I believe similar instances are also occuring in the US.
